Gloria Macapagal-Arroyo

President of the Republic of the Philippines 2001 - 2010

Digital Networks

Perspective

National governments worldwide have included in their development agenda harnessing the power of technology to deliver important information and communication on day-to-day services in a socially responsive, economically efficient, environmentally responsible and secure manner. The Philippine Government is not an exception. The reason is straightforward: information and communication technologies (ICT) play a critical role in driving economic growth and promoting social cohesion, giving rise to tremendous incomes to businesses and people and enhanced interaction within and among communities. This section articulates some Philippine Government achievements in ICT development and, in consequence, in the country's industrial modernization.

I. Pursuing an ICT Development Strategy

A. Development Strategies

The Philippine ICT Roadmap of 2007 sets the nation's strategic direction to achieve its goal of global competitiveness. The first strategy involved enhancement of physical infrastructure in order to accelerate interconnectivity and secure wider public access to a minimum set of information and communication services. The succeeding strategy involved the solidification of appropriate policies and setting fitting legal environments for serving as the foundation for growth. Subsequently, priority was put on development of the country's human capital for the end of enhanced and sustained economic and social development.

Central to the achievement of these strategies is the establishment of major telecommunications and ICT systems, such as cellular mobile telephone service (CMTS), wired and wireless telephones and internet service for serving all areas of the country, as integral parts of the country's national infrastructure.

B. Unprecedented Developments

1. Rise in Connectivity

The years of 2001-2010 marked a period of unprecedented developments in ICT for the Philippines. According to International Telecommunication Union (ITU) indices, in 2007, there were about 4.48 fixed telephone lines per 100 inhabitants and 58.88 per 100 inhabitants subscribed to mobile cellular phones. The combined fixed-line and mobile-cellular telephone density was about 63 telephones per 100 persons.

2. Jump in Broadband Subscribers

To date, there are 170 million cell phone users in the country, accounting for the increase in the exchange of text messages from 40 million in 2000 to an estimated 500/600 million text messages every day.

There remains strong potential for broadband growth as a result of which, responding to projected demand, the Philippine Long Distance Telephone Company (PLDT) (among other telephone-communication providers) has committed around P 20 billion per year from 2008 to 2010 to improve its broadband connectivity. PLDT's investments in broadband connectivity are obviously paying off since its broadband subscriber base has been growing, by 184 percent, to 302,000 by the end of 2007 from 122,000 in 2006. PLDT wireless broadband revenues grew to P 2.4 billion in 2007, a 190 percent improvement over the P 823 million in 2006.

According to 'Internet World Stats', an international website that features up-to-date world Internet Usage, Population Statistics and Internet Market Research Data, the total number of internet users in the Philippines jumped from just two (2) million in 2000 to 24 million as of 30 September 2009. The country also ranks 18th in the world and 6th in Asia in terms of number of internet users.

C. The Cyber-Corridor Super Region

A concrete manifestation of the success of the ICT strategies was the laying of the Philippine Cyber Corridor by the President in 2006, for the specific purpose of reinforcing the country's global competitiveness in the business process outsourcing (BPO) market. This ICT channel, traversing over 600 miles from the north to the south of the Philippine archipelago, consists of a US $ 10 billion high band-width fibre backbone and digital network, redundant international connectivity, and reliable power supply connecting dedicated IT parks in many of the country's urban areas.

The channel is supported by a deregulated telecommunications environment, low rental rates with liberal terms, and proximity to internationally recognized property management companies. The IT parks are themselves major infrastructure initiatives by the government in support of high technology industries.

An extensive airport network also traverses the channel, consisting of ten (10) international airports and 15 domestic airports within the Cyber Corridor: Bacolod . The cyber corridor channel currently houses 75,000 call centers and BPO companies.

II. Establishing Key Institutions and Organizations

A. The Commission on Information and Communications Technology

To have an executive department focused on ICT development, the Government, through Executive Order No. 269, established the Commission on Information and Communications Technology (CICT). The order consolidated the government's various ICT agencies -- the National Computer Center (NCC) of the Department of Science and Technology (DOST), the Telecommunications Office (TELOF) and other communications units of the Department of Transportation and Communications (DOTC) -- into the CICT. In addition, the National Telecommunications Commission (NTC) and the Philippine Postal Corporation (PhilPost) were attached to the CICT for policy coordination purposes.

The CICT serves as the primary policymaking and coordinating entity of the Philippine executive branch for the promotion, development, and regulation of integrated and strategic ICT systems and reliable and cost-efficient communication facilities.

The Chairman of the CICT was given Cabinet rank to facilitate collaboration with the secretaries of the executive departments.

The NCC is designated as the CICT's e-Government Development Group, whilst the NTC serves as the regulatory body, likewise attached to the DOTC. The DOST particularly through the Philippine Council for Advanced Science and Technology Research and Development (PCASTRD) and the Advanced Science and Technology Institute (ASTI), implements research and development programs that address critical application areas and support ICT-based entrepreneurship. The DTI, through its agencies involved with investment promotion, entrepreneurship, and export development, seeks to provide an environment that would attract investors in ICT and ICT-enabled service industries. The Philippine Economic Zone Authority (PEZA) is positioned at overseeing the development and management of the ICT parks.

B. Next Wave Cities

To carry out the President's directive to develop the Cyber Corridor, the CICT worked closely with BPAP and the DTI in identifying Next Wave Cities that can host IT-BPO operations aside from the Centers of Excellence of Metro Manila and Metro Cebu. This was accomplished by conducting an assessment of potential candidate cities across the country using an objective and comprehensive IT-BPO Scorecard jointly developed by the CICT, BPAP and DTI. The scorecard included a wide range of criteria grouped into four sections: talent, infrastructure, cost and business environment.

To assist in the assessment of these cities, the CICT established local ICT Councils made up of local ICT stakeholders from the government, private sector and academe to take the lead in the initial self-assessment of the cities. To date, thirty-one ICT councils have been established all over the country and the list continues to grow. In addition, the CICT encouraged these ICT Councils to organize themselves into the National ICT Confederation of the Philippines (NICP) to strengthen their role and facilitate discussions with other organizations such as BPAP.

In 2008, CICT, BPAP and DTI released the list of Top Ten Next Wave Cities to provide potential IT-BPO investors with alternative locations to Metro Manila and Metro Cebu. The Top Ten Next Wave Cities are Metro Laguna, Metro Cavite, Iloilo, Davao, Bacolod, Metro Pampanga, Metro Bulacan, Cagayan de Oro, Central Bulacan and Lipa. The list will be updated on an annual basis to take into account the ongoing developments in the respective cities.

Source: Business Processing Association of the Philippines, Commission on Information and Communications Technology, Department of Trade and Industry

Note: Overall = 50% Talent + 30% Infrastructure + 15% Business Environment + 5% Cost

  • Includes Sta. Rosa, Cabuyao, Calamba, Los Baños and San Pablo
  • Includes Bacoor, Dasmariñas, Imus and Cavite City
  • Includes Clark/Angeles, Mabalacat and Dau
  • Includes Baliuag, Marilao and Meycauayan
  • Includes Malolos and Calumpit

III. Pushing for a Global Powerhouse in Business Process Outsourcing

A. A Rapidly Growing BPO Industry

Through a combination of pro-ICT policies and a non-interventionist approach to industry development, the Government has succeeded in fostering a rapidly growing business process outsourcing industry in our country. Today, internationally recognized as a top alternative destination for BPO services next to India, the BPO industry includes call centers, back office operations, software development, medical and legal transcription, engineering design, animation and game development, among others.. A US $7.2 billion revenue industry employing a total of 442,164 workers as of 2009 , the industry is expected to grow by 26% in 2010 to US $9.1 billion of revenues and 557,127 workers . This is not too far from India's estimated US $12.4 billion of revenues in 2010 , despite the fact that the Philippines has only one-tenth the population of India.

Source: Business Processing Association of the Philippines

B. International Recognition

As the Philippine IT-BPO industry has grown tremendously over the past ten years, it has also become the recipient of numerous awards and distinctions from a variety of media and industry sources. In 2009, the Philippines was named "Offshoring Destination of the Year" by the National Outsourcing Association of the United Kingdom. It was the second time the Philippines received this distinction in three years, having received the award in 2007. International Data Corporation ranked Manila number three in its list of Top 10 Outsourcing Cities in Asia Pacific, next only to the two Indian cities of Bangalore and New Delhi. Tholons/Global Services ranked Cebu City number one its list of Top 50 Emerging Outsourcing Cities. Finally, KPMG included Davao City and Iloilo City in its list of 31 New Emerging IT-BPO Destinations.

IV. Accelerating BPO Industry Promotion

A. Exploring New Markets

As the Philippines steadily secures its reputation as a favored off shoring destination, the government has shown more aggressiveness at increased promotion of our industry and has since penetrated new markets. In 2008, the government started playing a bigger role in promoting the industry in the international markets; Secretary Ray Anthony Roxas-Chua III accompanied BPAP CEO Oscar Sañez in numerous international trade missions, including Sydney, Australia; Singapore; New York, USA; and London, UK, where they would jointly promote the IT-BPO investment opportunities in the Philippines.

The promotional activities were expanded in 2009, as the government provided PHP60 million in direct funding to the IT-BPO industry to support these activities. The 2009 international trade missions included Las Vegas, USA; Sydney, Australia; Tokyo, Japan; Singapore; New York, USA; Geneva, Switzerland; and London, UK. The government funding paid for the country's participation in IT-BPO conferences in these cities, including the exhibit space and speaking slots. In addition, the funding paid for advertising in a variety of media, including Smart Money, Everest Research, Tholons Global Services, First Magazine, and Oxford Business Group.

B. ICT Investment Incentives

In order to attract IT-BPO investments in the Philippines and advance our global competitiveness with other IT-BPO destinations, the government has made strategic moves to augment venture incentives for IT-BPO investments. From January to April 2001, a total of P5.5 billion in investments in ICT was approved and since then, the BPO industry earned US$7.3 billion in 2009, a tremendous increase from only US$24 million revenues in 2000 . The Board of Investments (BOI), an agency under the Department of Trade and Industry (DTI), included voice and non-voice IT-enabled services such as contact center, business/knowledge processing, software development, animation, data transcription, engineering design, and ICT support services into the Investment Priorities Plan.

In addition, IT-BPO investors were also able to avail of investment incentives from the Philippines Economic Zone Authority (PEZA), another agency under the DTI. PEZA provides fiscal and non-fiscal incentives to export oriented businesses, which include IT-BPO operations, located in PEZA-accredited locations. Not only have these incentives attracted investments in IT-BPO, they have also spurred developments in PEZA-accredited information technology (IT) parks and buildings, which currently number 187 . Of these, 106 are in Metro Manila, 23 are in Luzon, 49 in Visayas and 9 in Mindanao. The specific regional breakdown is as follows:

Source: Philippine Economic Zone Authority

Investments in ICT as reported by the BOI and the PEZA amounted to 14.7 billion, or an increase of about 18% from the amount of P12.5 billion generated in 2008. Total investments for the period 2003-2009 have reached P 79.6 billion, representing 958 projects, and creating 295,640 jobs.

Source: Philippine Economic Zone Authority

V. ICT Education Investments

A. Enhancements in Secondary Schools

Among the Government's vital ICT initiatives is the increasingly necessary assurance that all public high schools in the Philippines be provided with broadband Internet access. In today's society, computer and Internet literacy is practically a must for many employment opportunities, and even more so for tertiary education. In order to address this burgeoning need, the Government has issued directives and is in the process of implementing several programs through the two concerned agencies: the CICT and the DepEd. The near-impossible task of delivering computer laboratories to all of the nation's 6,650 public high schools and simultaneously granting them access to the Internet, in spite of the Philippines' archipelagic and Internet-unfriendly geography, was a challenge that was met with enthusiasm and a definitive action plan.

B. The 'iSchools' Program

The CICT's tactic was simple and straight to the point. The iSchools program equips public high schools with computer labs and connects them to the Internet, thus developing and helping to sustain an Educational Digital Network for the benefit of students and teachers alike. These beneficiary high schools are the fortunate recipients of ICT equipment, education, training and assistance from the more than 35 participating State Universities and Colleges (SUCs) involved in iSchools.

In essence, the CICT builds the capabilities of the SUCs through training programs that touch on ICT Literacy, Laboratory Management, Library Management, Project Management and Sustainability Planning – all taught within the framework of maximizing the use of available educational resources through the application of ICT know-how and with the help of open source software and freeware. The SUCs, in turn, operate and manage iSchools computer laboratories located in public high schools. In this way iSchools is truly a community effort, involving many citizens of project-affected areas and causing them to interact and affect each other's progress.

To date, the CICT has delivered more than 650 computer laboratories to public high schools, more than 475 of which are connected to the Internet. The Government expects to increase those numbers and deliver more than 300 additional computer laboratories by June 2010, and provide Internet connectivity to an additional 175 or more. As a nod to the success of this program, iSchools was given the Digital Inclusion Award at Asia's 3rd Annual Government Technology Awards, held by FutureGov in 2009.

C. The 'eSkwela' Project

The CICT continues to be at the forefront in terms of improving the state of ICT education in the Philippines with the eSkwela project. Like iSchools, it provides a computerized learning environment for Filipino youths. The difference is in the details – while iSchools links SUCs and public high schools and encourages a community effort, esKwela effectively digitizes the content and curriculum of the DepEd's Bureau of Alternative Learning System and encourages an inter-agency effort.

This collaboration orchestrated by the Government was initially funded by the APEC Education Foundation. Four pilot locations were established – one each in Quezon City; San Jose Del Monte City, Bulacan; Cebu; and Davao. Due to the success of these four locations, the CICT sought other stakeholders to collaborate with on this venture. An additional 18 sites were established with the following setup: partners provide the computer laboratory while the CICT provides the content and training. At least 230 more sites are targeted for establishment this 2010.

The results of the project are eye-opening, to say the least. In the October 2008 Accreditation and Equivalency (A&E) Test administered by the DepEd, the national average passing rate was at 22.94%; the average passing rate for esKwela sites, in comparison, was 65.12%. Recognizing the efforts of the CICT and DepEd, the UNESCO ICT in Education Innovation Awards in 2007-2008 awarded esKwela with a Certificate of Commendation.

D. DepEd Internet Connectivity Project

Launched in May 2009 in conjunction with the multi-sectoral program 'Gearing Up Internet Literacy and Access for Students' (GILAS), the DICP's main purpose is to connect all Philippine public high schools to the Internet. Supplementary concerns include the provision of training and monitoring for students, teacher and other school personnel using the Internet connection. The program covers the Internet subscription fee of beneficiary schools provided that the annual cost does not exceed P48,000 per school.

Connected Schools Under the DepEd Internet Connectivity Project (DICP) (as of 25 January 2010)

Source: Department of Education

Thanks to the combination of hard work and diligence from both the CICT and the DepEd, as of January 2010 the Government reported that 5,410 out of the 6,650 public high schools of the Philippines had their own computer laboratories, 3,767 of which enjoyed Internet access. In addition, more than 60 SUCs had established web presences in varying degrees; making possible faster and more efficient school-to-student transfer of academic and extra-curricular information, and more public awareness in terms of the schools' programs, facilities and miscellaneous offerings.

Secondary Schools with Computer Laboratories (as of 7 January 2010)

Source: Department of Education

Immediate goals for the Government for the rest of 2010 include: connecting all Philippine public schools to the Internet by the end of the year, and the commencement of the promotion of ICT in elementary schools.

E. Training the Next Generation of IT/BPO Workers

The Government was quick to support the IT/BPO industry's programs for long term success and sustainability. It realized that the development of this industry lies parallel to the establishment of a national operational digital infrastructure. With this in mind, the Government set out to train its existing workforce, to enable them to qualify for jobs in the IT/BPO sector. This initiative is complemented by the previously discussed ICT enhancement programs implemented in public high schools all over the Philippines. Thus, the end result is a steady stream of available manpower for an industry that not only provides employment opportunities and contributes to the growth of the national economy, but is also very future-oriented.

The Government focused its financial support to the development and training of the nation's human capital early on, anticipating the emergent demand for skilled and competent IT/BPO workers. Through the Technical Education Skills Development Authority (TESDA), the Government allocated P350 million to subsidize IT/BPO training programs in 2008. Fresh college graduates were selected and prepared for careers in the IT/BPO industry through the Training for Work Scholarship Program (TWSP). This program subsidized career preparation through the issuance of vouchers to TESDA-accredited training institutions.

Voucher amounts ranged from P5,000 for basic call center training to as much as P30,000 for software development training. The following year, yet another P350 million was allocated for the TWSP, which was then renamed the Pangulong Gloria Scholarships (PGS). The Government, again through TESDA, collaborated with the Business Processing Association of the Philippines (BPAP) in the distribution of vouchers and the identification of IT/BPO subsectors that would benefit the most from the Government's assistance.

In the years 2008 and 2009, a total of 65,644 IT/BPO near-hires were prepared and trained under these programs, of whom 46,002 were eventually hired and given jobs by the IT/BPO industry.

VI. Enhancing Governance through ICT

Acknowledging that ICT can serve as a vital tool towards the provision of an increase in efficient service to the people, the Government has secured advancements in the industry to facilitate transparency as well as advance public awareness of national functions and services to the Filipino people.

A. E-government Fund

Achieving a technologically-advanced government comes at a cost. In 2002, the government, through the Information Technology and E-Commerce Council (ITECC), created the E-Government Fund to provide funding for government information and communication technology projects to be prioritized by the ITECC. These projects were in conjunction with the Government Information Systems Plan (GISP) that made possible the completion of high-impact and mission-critical projects. The ITECC was succeeded by the CICT upon the latter's creation in 2004. A total of 57 projects, worth P6.4 billion, from 51 agencies were supported by the E-Government Fund. These projects include the Bureau of Customs e-Customs project, BIR Integrated Computerization Project, DBM Government e-Procurement System, and the National Computer Center e-LGU Project.

B. Government Websites

The government has taken advantage of modern technology in order to reach out to the people through the creation of websites of various government agencies containing different information and data – from the organizational structure, online services, up to online complaints and referrals – which are readily accessible through the internet. Online facilities such as interactive and transactional government websites allowed the people to securely carry out business with government agencies in shorter times. The establishment of government websites has also improved transparency in and accessibility to public information. There is no more need to physically drop by the offices of government agencies to ask for information as these are already available online.

The Commission on Information and Communications Technology (CICT) was tasked to regularly monitor websites of national government agencies and to provide the needed technical assistance to other government agencies that plan to build up their own online portal or to those that want to enhance their existing space in the worldwide web. The latest count as of December 2009 shows that 300 national government agencies have an existing website. This number translates into 92.6% web presence of national government agencies.

To further make government services accessible through modern technology, short message services (SMS) were likewise utilized to achieve this purpose. Since the Philippines is the "texting capital of the world", the government hopped into the bandwagon and thus m-governance – the use of mobile technology in providing public service – was born. To date, there are 324 national government agencies which have short messaging facilities to quickly respond to public inquiries.

C. ICT-related Legislation

The road towards making the Philippines a technologically-advanced country did not end in the creation of the CICT or in the provision and use of modern technology in different sectors in the country. The government made an effort to push for ICT-related legislation. Two of the proposed measures were the creation of the Department of Information and Communications Technology (DICT) and the passage of the Cybercrime Bill. The latter was designed to address the increasing concern over the commission of cybercrimes, providing for punishments and sanctions to perpetrators of these kinds of crimes. However, time did not permit these two bills to become laws, having stopped when Congress adjourned.

VII. Continuing the Rise of ICT for the Philippines

The Government can take pride in taking the leadership in the development of ICT in the country in the past decade. The fruits of this effort are undeniable. The Philippines is now considered one of the leaders in the world when it comes to IT-BPO, mobile telephony, social networking and telecenters.

Much remains to be done, however, in order to fully harness the benefits of ICT for the country. As the new administration prepares to take over the torch by mid-2010, it is hoped that it also will leave no stone unturned in further elevating the nation's stature to that of an efficient and dynamic participant in the global ICT community and also in directing the benefits of this new technology to the uplift of the life conditions of the Filipino people.


Bibliography:

Akhtar, Shahid, Arinto, Patricia and Hassan, Musa Abu (COR). 'Digital Review of Asia Pacific 2009-2010: Reports on 30 Economies 4 Sub-Regional Groupings'. www.digital-review.org.

Horan, Thomas and Zimmerman, Rae. Digital Infrastructures: Enabling civil and environmental systems through information technology. Routledge, 2004.

'Internet World Stats'. http://www.internetworldstats.com/stats3.htm#asia. 30 January 2010.

Oxford Business Group. The Report: The Philippines. The Oxford Business Group, 2008.

State of the Union Address Technical Report 2009


Other References:

Business Processing Association of the Philippines

Department of Education

Civil Aviation Authority

National Association of Software and Services Companies

Philippine Economic Zone Authority